In the case of a fireplace I would always look toward future sales of the property and preserve it in case a future buyer wanted a fireplace but I have and do have my carpenter permanently block it off with a heavy duty wood piece, usually 1/2” plywood that we then paint to match the room.

CONSLower revenue potential vs B & BStill need to get the B & B license (and still need to provide "breakfast" even coffee & donuts)STR biz model would mean much hight taxes vs B & B business (from what I understand)HUGE Airbnb competition - area is highly desirable but oversaturatedPROSGreat revenue for an under $500k total investmentQuicker ramp up to produce revenueCan become passive much sooner than a B & B OPTION 3.

@Joshua TanWe have access to a Landlord insurance program that includes 2500 deductible, 1 million liability, replacement cost, loss of rents, and water back up that is very competitive in price.

On the VA loan topic - great in theory, but Milwaukee has become a very competitive market.

The amenities your competition offers will determine how booked they are, and also will help guide you to figure out what you need to offer to separate yourself. 

One of the two applications I've seen them used in has 3 kids in the house and they see heavy use, and they hold up.  

You're better off asking on here, imo.I try to screw my competition.

The market here is quite competitive as I'm sure you know.I would suggest looking into CFRI.net as a great place to meet people and network.

Do you see any scenario of making a competitive offer with an FHA loan?

It's getting hotter and more competitive though!